Chain Pain: Touring The Disruptions In Casual Dining
Sally Smith, CEO of Buffalo Wild Wings (1,235 locations) has some words of dire caution for the casual dining industry. In a fight with activist investors over the direction of the company she leads, Smith attributed the company’s recent ills to sea changes in how younger customers — millennials — approach eating out.
“Casual dining restaurants face a uniquely challenging market today,” wrote Smith in a letter to shareholders. Citing observed habits among millennials including eating faster, ordering delivery and cooking at home, Smith even went so far as to cite a national downturn in television sports viewing, a trend that’s been on the sports industry’s radar for months and that undercuts a big force attracting diners to chains such as Smith’s.
In March, Business Insider reported that industry tracker TDn2k had found 2016 was the worst year for the restaurant industry generally, with the casual dining sector performing worst of all. Major casual dining brands include Applebee’s (2,000+ locations), Chili’s (1,600+ locations), TGI Friday’s (990 locations), with the “fast casual” category including Chipotle (2,250 locations) and Panera Bread (2,000 locations).
Casual Vs. Fast Casual
The Washington Post reports that growth in “fast casual” dining was an eye-popping 550% from 1999 to 2014. But the current environment for casual dining is very often tied to the general decline in mall traffic, where casual dining establishments tend to rent. Shortly before being replaced as the CEO of TGI Fridays, then-CEO John Antioco cited his decision to deepen the company’s suburban presence near to 2010 was responsible for the company’s slump.
Also adding to the fray: falling grocery prices. The financial crisis of 2008 seems to have instilled in the American consumer a stronger tendency toward thrift, leading diners to emphasize bang for the buck.
With many thousands of locations in the balance, and with dining and shopping habits so clearly intertwined, the struggles of the casual dining industry and the retail property industry seem to be ordering off the same menu.
(Photo credit: Wikipedia)